Under the Employment Standards Act, 2000 (ESA), subject to certain exceptions, an employer cannot pay an employee at a rate of pay less than another employee on the basis of:

• sex
• employment status

when they perform substantially the same kind of work in the same establishment, their work requires substantially the same skill, effort and responsibility and their work is performed under similar working conditions.

This standard is commonly referred to as “equal pay for equal work.”  Employers cannot lower employees’ rates of pay to create equal pay for equal work.

If you are a temporary help agency or an assignment employee, there are also additional equal pay for equal work obligations for assignment employees.  For more information, visit the Temporary Help Agencies chapter.

Protections under the Ontario Human Rights Code

Ontario’s Human Rights Code protects people in Ontario from employment discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, disability, age, marital status, family status and record of offences. If an employee believes that a difference in their rate of pay may be related to discrimination on any of these grounds, they may wish to contact the Human Rights Legal Support Centre.  It can be reached at: 416-597-4900, 416-597-4903 (TTY) or toll-free at 1-866-625-5179 or 1-866-612-8627 (TTY). 

What is equal work?

Equal pay for equal work applies when there is “equal work” meaning the employees perform substantially the same kind of work in the same establishment, the work requires substantially the same skill, effort and responsibility and is performed under similar working conditions. All of these conditions must be met for equal pay for equal work to be required. There are some exceptions (set out below).

Substantially the same kind of work

“Substantially the same kind of work” means the work does not have to be exactly the same.  What matters is the actual work performed by the employees, not the stated conditions of their job offer or their job description.

Same establishment

An establishment is a location where an employer carries on business. For example, an employer owns a hardware store. The hardware store is the employer’s establishment.

Two or more locations are considered a single establishment if:

• they are in the same municipality

  or

• there are common “bumping rights” for at least one employee across municipal borders

“Bumping rights” are the contractual right of an employee being laid off to replace an employee with less seniority who is not being laid off.

Example

An employer owns two hardware stores in the same city. The two hardware stores are considered a single establishment because they are in the same municipality.

The employer owns a third hardware store in a different municipality. The three locations would not be considered a single establishment unless one or more employees could bump other employees in a different municipality.

Substantially the same skill, effort and responsibility

Skill means the amount of knowledge, physical skill or motor skills needed to perform a job. This includes:

• education, like post-secondary degrees and diplomas
• training, like apprenticeships
• experience, like the number of years required to master a skill or gain expertise
• manual dexterity, like hand-eye coordination

Effort is the physical or mental effort regularly needed to perform a job. An example of physical effort is the physical strength a labourer needs to lift boxes. An example of mental effort is the amount of concentration and thinking a lawyer needs to do legal research.

Responsibility includes the number and nature of an employee’s job responsibilities, and how much accountability and authority the employee has for those responsibilities.

This includes:

• the ability to make decisions and take action
• responsibility for the safety of others
• supervising other employees
• handling cash
• the amount of supervision over the employee

“Substantially the same skill, effort and responsibility” does not mean the skill, effort and responsibility must be exactly the same for equal pay for equal work to apply. What matters is skill, effort, and responsibility needed for the actual work performed by the employees, not the stated conditions of their job offer or their job descriptions.

Similar working conditions

Working conditions include:

• the working environment, like an office or outdoors
• exposure to the weather, like rain or snowstorms
• health and safety hazards, like exposure to chemicals or heights

Example

Jane and Lucy are library assistants who work in the same library. Jane works full-time while Lucy works part-time. They both have undergraduate degrees, but they did not need a degree to qualify for their jobs. They help people with checking books in and out of the library. They also sort books and organize book shelves. They make decisions following library policy. Jane and Lucy perform work that is substantially the same kind of work in the same establishment. Their work requires substantially the same skill, effort, responsibility and is performed under similar working conditions.

Norman is a librarian at the same library. He has a graduate degree in library science, which is a requirement for his job. He helps people with checking books in and out of the library, as well as research. He also supervises library assistants, opens and closes the library and handles any complaints. Norman, Jane and Lucy work under similar working conditions, however Norman’s work requires different skill, effort and responsibility.

Example

Andy and Kyra both work as labourers on a production line in a warehouse. Kyra packs plastic spoons into small boxes, and Andy packs plastic plates into boxes. Andy and Kyra are doing substantially the same kind of work in the same establishment. Their work requires substantially the same skill, effort and responsibility and is performed under similar working conditions.

Jackson is also a labourer in the same warehouse as Andy and Kyra. He drives a forklift that lifts boxes of spoons in and out of the warehouse, which means he spends part of his working time outdoors, even when the weather is bad. Jackson needed specialized training to be able to drive the forklift, and he is responsible for driving it safely. Jackson’s work requires the same effort as Andy and Kyra’s work, but it requires different skill, responsibility and working conditions.

What is a difference in rate of pay?

Generally, a difference in rate of pay includes a difference in:

• hourly pay rate
• salary
• overtime pay rate
• commission rate

A difference in rate of pay does not include a difference in benefit plans.

Equal pay for equal work on the basis of sex

The ESA generally requires that employers pay men and women equal pay for equal work. That means that a woman cannot be paid less than a man if she is doing “equal work” to him. A man also cannot be paid less than a woman if he is doing “equal work” to her. The ESA does not prevent employers from paying employees of the same sex different rates of pay for equal work as long as it is not due to a difference in employment status.

Note that other legislation, such as the Ontario Human Rights Code, may prohibit employers from paying employees of the same sex different rates of pay for equal work on other grounds not addressed in the ESA.

Equal pay on the basis of sex and pay equity: What’s the difference?

Ontario has legislation called the Pay Equity Act to ensure that employers pay women and men equal pay for work of equal value. This means that men and women must receive equal pay for performing jobs that may be very different but are of equal or comparable value. The value of jobs is based on the levels of skill, effort, responsibility and working conditions involved in doing the work.

For more information on pay equity, visit the Pay Equity Commission's website.

Equal pay for equal work on the basis of employment status

Employers, subject to certain exceptions, must pay employees of different employment status equal pay for equal work. This means that employers cannot pay an employee a lower rate of pay than another employee who performs equal work because of a difference in employment status.

A difference in employment status means:

• a difference in the number of hours regularly worked (e.g.  25 hours compared to 35 hours)
• a difference in their term of employment, such as permanent, temporary, seasonal or casual status

Example

• a part-time employee cannot be paid less than a full-time employee for equal work
• a seasonal employee cannot be paid less than a permanent employee for equal work

Employers may pay employees of the same employment status different rates of pay for performing equal work, as long as it is not due to a difference in sex.

Note that other legislation, such as the Ontario Human Rights Code, may prohibit employers from paying employees of the same employment status different rates of pay for performing equal work on other grounds not addressed in the ESA.

Exceptions

Even if employees of different sexes or employment status are doing equal work, they can be paid different rates of pay if the difference is due to:

• a seniority system
• a merit system
• a system that measures earnings by production quantity or quality

These systems should be transparent, meaning that they should be clear, documented and communicated to employees as part of employer policies. These systems should be based on objective and measurable criteria, meaning that the rules used to determine whether an exception applies are unbiased and can be counted or otherwise measured (see Best Practices below).  Exceptions as a whole should be applied equally to employees of both sexes and employment status. Lastly, these systems cannot be based in any way on sex or employment status.

Employees who perform equal work can also be paid different rates of pay if the difference is based on any other factor other than sex or employment status.

Seniority system

A seniority system is generally one in which an employee receives rights based on their length of service with their employer.  For example, an employer runs a grocery store and employs cashiers who perform equal work. All cashiers receive a $1 per hour raise after their first year of employment.

An employer may pay an employee with greater seniority a higher rate of pay than another employee of different sex or employment status for equal work if the difference in pay rates is based on a seniority system.

Merit system

A merit system is generally one in which employees receive compensation based on an assessment of how well they perform their jobs. An employer may pay an employee a higher rate of pay than another employee of a different sex or employment status for equal work if the difference in pay rates is based on a merit system.

For example, an employer owns a furniture store and employs customer sales representatives who perform equal work. All customer sales representatives are eligible for a salary increase of 3 per cent if they meet their sales targets in a six month period.

System that measures earnings by quantity or quality of production

An employer may pay an employee a higher rate of pay than another employee of a different sex or employment status for equal work if the difference in pay rates is based on a system that measures earnings by production quantity or quality.

For example, an employer operates a widget factory and employs manufacturing employees who perform equal work. All employees receive $1 per completed widget, and receive a pay increase of .15 cents per widget after they complete 1,000 widgets.

Any other factor other than sex or employment status

An employer may pay an employee a higher rate of pay than another employee of a different sex or employment status for equal work if the difference in pay rates is based on any other factor other than sex or employment status.

Although it is not a requirement, employers may wish to ensure that the factor is transparent, based on objective and measurable criteria, and applied equally to employees of all sexes and employment status.  

The factor must not be connected in any way to sex or employment status.

Best practices for employers

As a best practice, employers who rely on a seniority system, merit system, a system that measures earnings by quality or quantity of production, or any other factor to pay employees different rates of pay for doing equal work, should document the system(s) and advise all employees of how the system(s) apply.

Employers are also encouraged to:

• review their pay structures to ensure that they are in compliance with the equal pay rules in the ESA
• develop a salary or wage rate grid that outlines the minimum and maximum rates of pay for each job and advise employees of how they will progress through the grid
• post wage rates or scales for advertised job vacancies
• avoid asking job applicants about their prior compensation and benefits or looking for that information through other means during the hiring process

(Source: The Government of Ontario)